The Australian dollar extended advance and hit new three-week high at 0.7171 in Asian trading on Wednesday, as fresh optimism over US/China trade talks deal boosted riskier assets and commodity-linked currencies.
Strong bullish sentiment offset negative impact from downbeat Australian data (building approvals Nov -9.1% vs -0.3% f/c), as the pair cracked the lower boundary of strong resistance zone between 0.7164 and 0.7183, consisting of a cluster of daily MA’s and the base of daily cloud.
Bulls need to break these barriers and emerge above daily cloud (cloud top lays at 0.7227) to generate strong signal for extension of recovery from 0.6706 spike low, however, strongly overbought daily slow stochastic warns that the rally may show hesitation here.
Consolidation above 20SMA (0.7109) is seen as ideal scenario to keep bulls in play, while break lower would weaken near-term structure and risk test of lower pivot at 0.7072 (rising 10SMA).
Res: 0.7171, 0.7183, 0.7227, 0.7246
Sup: 0.7133, 0.7109, 0.7072, 0.7050
